3rd european sms symposium - 2012 london - managing risks with carrots & sticks

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YOU CAN LISTEN TO THE NARRATED VERSION OF THIS 

PRESENTATION @ https://talk.city.ac.uk/p47043247/

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A quote from “The Balanced Scorecard – Measures that Drive Performance” by Robert S. Kaplan andDavid P. Norton, published in HARVARD BUSINESS REVIEW Jan–Feb 1992

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INCENTIVES & PENALTIES MAY DRIVE CULTURAL CHANGE

Source: Flicker

 ‐ Connected

 Company

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INCENTIVES & PENALTIES

ENCOURAGE RISK TAKING & DISCOURAGE REPORTING

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•   FOQA / FDM

•   Aircraft / Engine Health 

Monitoring (Real

‐time

accessing data collected 

from systems onboard)

•   Thanks to TECHNOLOGY 

but it has its limitations

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Engineering a Safety Culture - Prof. James ReasonSource: Managing the Risks of Organisational Accidents, 1997

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Engineering a Safety Culture - Prof. James ReasonSource: Managing the Risks of Organisational Accidents, 1997

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Risk management is a balancing act. It involves balancing risks and rewards.

Risk Thermostat – Prof. John AdamsSource: Risk, 1995

“We are all ambivalent risk managers.

Managing risk involves balancing

 potential rewards against potential 

losses. No one wants an accident but 

everyone wants to be free to take risks ‐

without them life would be unutterably boring. Safety interventions that do not 

acknowledge the perceived rewards of 

risk are likely to be met with behaviour 

that seeks to frustrate them. We also

resent and resist risks imposed upon usby others and, generally, support 

regulation to contain them.” 

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“If you look at the science there is a mismatch between what science knows and  what 

business does. And what's alarming here is that our business operating system, think of the set of assumptions and protocols beneath our business.   How we motivate

 people , how we apply our human resources. It's built entirely around these extrinsic 

motivators, around carrots and sticks.   That's actually fine for many kinds of 20th

century tasks, but   for 21st century tasks that meganistic reward and punishment 

approach doesn't work  , often doesn't work and  does harm.“ 

http://www.ted.com/talks/dan_pink_on_motivation.html

http://youtu.be/u6XAPnuFjJc

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processes for setting

performance measures

A Service Level Agreement (SLA) that

includes clear Key Performance Indicators

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Monthly Average

 Availability Achieved

% of Monthly

Revenue  Payable To

100.00 11.00% Maintenance Organisation

99.80 9.00% Maintenance Organisation

99.60 7.00% Maintenance Organisation

99.40 5.00% Maintenance Organisation

99.20 3.00% Maintenance Organisation

99.10 2.50% Maintenance Organisation

99.00 1.00% Maintenance Organisation

98.90 1.00% Operator (Airline)

98.80 2.00% Operator (Airline)

98.60 3.00% Operator (Airline)

98.40 5.00% Operator (Airline)

98.20 7.00% Operator (Airline)

98.00 8.00% Operator (Airline)

Technical Availability =F fleet size on the day

Do   length of  operating day (defined as 18 hours)

TOOS   total time out of  service during the day resulting 

from technical delays (see Clause S10.1.2.1) and 

out of  service events (see Clause S10.1.2.2).

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COMMUNICATING ACTUAL PERFORMANCE THROUGH 

INTRANET & TV SCREENS ACROSS THE ORGANISATION

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CONTR CTU L OBLIG TIONS

What happens if the Operator monitors the contracted organisation’s

performance only by ‘Availability’ and ‘Technical Dispatch Reliability’?

Number of  Deferred Defects Amount £ Payable to

0.5 or less 10,000 Maintenance Organisation

0.6 to 1.5 5,000 Maintenance Organisation

1.6 to

 2.5 2,000 Maintenance

 Organisation

2.6 to 3.5 0

3.6 to 4.5 2,000 Operator (Airline)

4.6 to

 5.5 5,000 Operator

 (Airline)

5.6 and more 10,000 Operator (Airline)

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Number of  Deferred Defects Amount £ Payable to

0.5 or less 10,000 Maintenance Organisation

0.6 to 1.5 5,000 Maintenance Organisation

1.6 to

 2.5 2,000 Maintenance

 Organisation

2.6 to 3.5 0

3.6 to 4.5 2,000 Operator (Airline)

4.6 to

 5.5 5,000 Operator

 (Airline)

5.6 and more 10,000 Operator (Airline)

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NEXT TIME YOU ARE GOING TO USE

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• Collecting data can be problematic for some

organisations, because the relationship between Just

& Reporting Culture is del icate. So be careful how tohandle punitive action.

• CAUTION: Risk Assessment is a subjective process.

Risk takers can always assess high risk as

acceptable.

• “THREE KINDS OF LIES! LIES, DAMN LIES & 

STATISTICS”  We need to chal lenge stat is tics, should not

always be slave to them and consider the big picture.

• Let ’s not get obsessed about per formance. Iron ical ly i f  

we push people too hard to achieve bet ter per formance,

they wil l take more r isks. (The f inancial mess we are in?)

• SMS SHOULD NOT STEAL THE LIMELIGHT FROM

HUMAN FACTORS! WE STILL NEED TO ADDRESS

HUMAN ERROR, RISK TAKING BEHAVIOUR AND

NEGLIGENCE TO ACHIEVE BETTER PERFORMANCE.

•

MANAGING HUMAN RISK NOT ONLY IN THE BOARDROOM BUT ALSO AT THE SHARP END IS THE KEY.

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MANAGING HUMAN RISK IS THE KEY TO ENSURE FLIGHT SAFETY.

I’M A

 GENUINE

ERROR MAKER

I’M A

RISK TAKER

I’M 

NEGLIGENT

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cengiz.turkoglu.1@city.ac.uk

Please 

do 

not 

hesitate 

to 

contact 

me 

if  

you 

require 

further 

information or you think we can conduct  joint research